Growing Good Business: Making Business and Human Rights Your Business 16 September 2016 www.a4id.org www.a4id.org

BHR – An Overview To what extent does a business impact people around the world? Area has grown gradually, but particular focus from 2011. United Nations Guiding Principles on Business and Human Rights (2011) Non-binding, but UN-endorsed Three pillars – “Protect, Respect, Remedy” State duty to protect Human Rights States must set out clear expectations on Human Rights and prevent/investigate/punish/redress abuses Corporate responsibility to respect Human Rights Businesses need to “know and show” that they comply with human rights standards At a minimum: International Bill of Human Rights and ILO’s Declaration on Fundamental Principles and Rights at Work, but others depending on circumstances (indigenous peoples, women, national/ethnic/religious minorities, children, people with disabilities, etc) Access to remedy States must take appropriate steps (judicial, legislative, administrative, …) to ensure that there is effective remedy when abuses occur within their territory Growing Good Business www.a4id.org

The Business Case – in brief Increasingly, businesses are expected to get this right + Real consequences for businesses getting it wrong ____________________________________ = Profitable and growing opportunity for legal advisors Growing Good Business www.a4id.org

Choosing Compliance Many clients are voluntarily signing up to BHR codes UN Global Compact 9,000+ businesses in 167 countries OECD Guidelines for Multinational Enterprises 46 governments (85% of foreign direct investment) encourage their enterprises to observe these Principles of Responsible Investment Signatories include 317 asset owners, 1,024 investment managers, and 210 professional service partners These can then carry binding consequences! Different sectors establishing what BHR requirements mean in practice JAC (Joint Audit Cooperation) – 10 major telecom operators Development banks / “Ethical” banks Oil & Gas – Shell, BP etc highly sophisticated in this area and including these principles in Partnership Agreements and other project contracts Commercial sector – e.g. Apple’s contracts with telecoms May start as a DD / supply chain issue, but failures make it a legal issue Growing Good Business www.a4id.org

But aren’t these standards non-binding? Indirect / long-term aspect: National Action Plans (NAPs) National Contact Points (NCPs) Proposal to make a binding treaty on BHR Direct aspect: UK Modern Slavery Act 2015  Statements by 6 Indian companies California Transparency in Supply Chains Act UK Companies Act ss.414 A-D S.414(C)(7)(b): strategic report to include, "to the extent necessary for an understanding of the development, performance or position of the company's business… information about environmental matters, the company's employees, and social, community and human rights issues", including information about any policies of the company in relation to those matters and the effectiveness of those policies. Possibility of fines for anyone involved in the business / report This is becoming “the law” – and as such, it is something lawyers need to know about Growing Good Business www.a4id.org

What price for a reputation? Reputational risk – countless examples Nike, Apple, Samsung, Sony and countless others Big payouts Shell (£55m for community livelihoods impacted by Nigerian Bodo oil spills) Adidas (agreed to pay £1.8m in unpaid severance owed to Indonesian factory workers after pressure from US universities, including University of Wisconsin who filed a breach of contract claim for Adidas’ failure to comply with anti-sweatshop provisions. How do you measure? E.g. www.reputationdividend.com Core driver of market cap growth – 36% of the value of the FTSE 350 reputation-based Combined value of reputations at the start of 2016 = £790 billion Growing Good Business www.a4id.org

Law firms as businesses and advisors Adopting and implementing a human rights policy (including training) Understanding how business impacts human rights Understanding the constraints of professional obligations Using leverage through our work Reporting publicly As advisors: Understanding the GPs and what States and companies are doing to implement them Human Rights Due Diligence/Environmental Impact Assessment Incorporation of standards into contracts Contractual provisions Public reporting requirements Risk management and corporate management Negotiations with or on behalf of governments Dispute resolution (creating mechanisms and adjudicating them) Growing Good Business www.a4id.org

From Theory to Practice First step is raising awareness – for clients, but also within a firm, as BHR issues offer a high potential for future work What kind of activities? Lectures for clients – either public or individual Hosting talks / seminars by academics / other speakers Annual attendance at the UN Forum on Business & Human Rights and other events Briefings on significant developments Internal training Growing Good Business www.a4id.org